PepsiCo cut its fiscal 2026 profit-growth outlook as North America continued to weigh on results.
Why it matters: The reset shows the challenge of turning higher sales into profitable growth amid pricing pressure, higher costs and weak U.S. beverage and snack volumes. PepsiCo's results also offer a read on consumer demand across branded foods and drinks.
- PepsiCo lowered fiscal 2026 core constant-currency EPS growth guidance to 1%-2%, from 4%-6%.
- The company lowered reported EPS growth guidance to 2.5%-3.5%, from 5%-7%.
- North American beverage reported revenue rose 5%, primarily from acquisitions, while volume fell 2%.
- PepsiCo Foods North America operating profit fell 13% in the third quarter.
PepsiCo cut its fiscal 2026 earnings outlook after reporting year-over-year results for the 12 weeks ended September 5, 2026. The company now expects core constant-currency EPS growth - underlying earnings-per-share growth excluding currency effects and certain items - of 1%-2%, down from its previous 4%-6% range. It lowered reported EPS growth guidance to 2.5%-3.5%, from 5%-7%, according to its third-quarter earnings filing.
PepsiCo raised its full-year reported net-revenue growth outlook to approximately 6%, from 4%-6%. It narrowed organic revenue growth guidance to approximately 3%, from 2%-4%. Organic revenue excludes the effects of acquisitions, divestitures and foreign-exchange changes.
Third-quarter revenue rose 5.6% year over year to $25.274 billion. Organic revenue growth was 3.1%, core operating profit increased 3% and core EPS rose 2%. Core operating margin - profit as a share of revenue after specified adjustments - contracted by 35 basis points, or 0.35 percentage point.
North American foods remained the biggest drag. PepsiCo Foods North America operating profit fell 13%, while core constant-currency operating profit declined 12%. Convenient-food trends improved sequentially on stronger savory-snack volume and market share, but lower effective net pricing - the average price effect after discounts and trade spending - offset those gains.
North American beverage reported revenue rose 5%, primarily from 2025 acquisitions, while volume declined 2%. International revenue growth was 8% in International Beverages Franchise and EMEA, 14% in Latin America Foods and 10% in Asia Pacific Foods.
Productivity savings, pricing and a four-percentage-point benefit from tariff refunds supported third-quarter profit, according to the earnings filing. Higher operating costs and increased advertising and marketing expenses offset some of those gains. PepsiCo plans additional cost reductions and expects $8.9 billion in cash returns, while pursuing single-digit percentage price increases on some Doritos, Ruffles, SunChips and soda products, the Associated Press reported.
"We expect North America's core operating margin performance to remain under pressure in the fourth quarter," Chief Financial Officer Steve Schmitt said in the earnings materials. CEO Ramon Laguarta said PepsiCo was focusing on improving soft-drink performance.
By the numbers
- 5.6% - year-over-year third-quarter revenue growth, to $25.274 billion
- 13% - decline in PepsiCo Foods North America operating profit
- $8.9 billion - planned cash returns
Yes, but: Higher revenue and international growth provided support, but North American foods profit, beverage volume and core operating margin all declined or remained under pressure.
What's next: PepsiCo expects North America's core operating margin performance to remain under pressure in the fourth quarter and plans additional cost reductions.